asif pel report final(submitted to khizar bin dost)

DEDICATION

Dedicated to my beloved parents and those

advisors & associates who helped me with

their precious ideas regarding this study.

Hailey College of Commerce

ACKNOWLEDGEMENT

All praise and thanks to Almighty Allah Who is the source of

all knowledge and wisdom. I have tried my best to share clearly

and specifically my findings and experiences with the readers. First

of all I bow my head before ALLAH, the Almighty the most

beneficent, the merciful, who blessed me with good health, kind

parents, talented teachers, nearer and dearer and an opportunity

for under taking this work. I am thankful to our Prophet

MUHAMMAD (PBUH) who guided the mankind to the path of

righteousness.


I deem it my utmost pleasure to

avail this opportunity to express

heartiest gratitude and deep sense of

obligation to my Prof. Dr. Liqat Ali Ch.

Principal, Hailey college of Commerce,

Punjab University Lahore and Project

Supervisor, for their dexterous

guidance, untiring help, kind behavior,

moral support and enlightened

supervision during the whole study

period. His effort towards the

inculcation of the spirit of constant

hard work and the maintenance of

professional integrity, besides other

valuable works of advice, will always

serve as a beacon of light throughout

the course of my life.


I would like to thank my respected teacher advisors like Mr. Muhammad

Aamir, Mr. Musarat Nawaz Dogar, Mr.Muhammad Ramzan, Mr. Muhammad

Akram & finally Ms. Shamma Sadakat for their kind, friendly and dedicated

attitude during my training session and I am sure that their supportive

information will prove itself as an asset for me in my practical life and it will

have a lot of benefits for me in my future concerns.

I have great sense of obligation to the Mr. Abid Hussain,Mr. Hamid

Rasheed and all other class fellow for their inspiring guidance, gracious

hospitality and constructive criticism for the accomplishment of this

manuscript.

I have special words of thanks to staff members of Hailey college of

Commerce, Punjab University Lahore for their wholehearted cooperation.

Last but not the least, I greatly acknowledge my indebtedness to

my parents and pray for their prosperity and I am determined to

continue and complete my study successfully.

Qutab Sikander

Executive Summary


The company comprises of two divisions; 1st is Appliances Division: This

Division of PEL consists of home appliances manufacturing particularly

Refrigerators. 2nd is Power Division: PEL Power Division is one of the major

electrical equipment suppliers to WAPDA & KESC. The company

manufactures transformers, energy meters, switchgears, kiosks, compact

stations and shunt capacitor banks.

Other than this, the company has developed a very good repute in the World

of credit due to which most of the Financial Institutions like National Bank,

Faysal Bank, Punjab Mudaraba have provided especial credit limits to the

Company in order to support its operational activities. While working with PAK

ELEKTRON LTD, I got very broader visions about company financial and

marketing activities more than those that I had learned during my B.Com

(Honors) program.

In 1956, the Saigol Group of Companies purchased major shares of PAK

Elektron Limited. At this junction, the company was only manufacturing

transformers and switchgears. With the Saigols in management, PEL

expanded into Refrigerators & Air Conditioner manufacturing and now it has

become a Giant in the World of Appliances.

Finally I have provided recommendations to the company regarding their

management functions and other business plans.

We are now living in that modern era of life which is full of challenges and

hurdles. So to survive in such sort of age a high degree of dedication,

confidence, & competency is required specially for those younger ones who

are going to be the future of the country specially students. But our education

system is not suitable for students as according to the coming period’s


requirements needed to be successful in life in this severe time. It is just only

limited to knowledge, prepares personnel for clerical work not for

entrepreneurship.

The practical life involves those methodologies and task which the students

never experienced in their daily routine of school, college, or university life.

Only the bookish knowledge is not sufficient to be well at home in all respects

in a student life as it demands strong distinction with respect to knowledge as

well as working capabilities. Only positive attitude and passion to perform any

task makes a man perfect in all respects/

Our educational institutes are only here to provide overviews about any field

or area of interest to students not the practical exposure. The market now a

time is so crucial that it is so difficult to have a place and retain here for a

general fellow. Besides there are some other factors that are responsible for

such critical position of the country like inflation, unemployment, lack of

resources etc. simply each and every part & portion of life of students is full of

problems regarding future. So only those younger ones may be able to

breathe here who may have potentials and commands over various

fundamental tactics of practices and pre-requisites and have enough strength

to face and accept the assigned task in their practical life.

Basically Internship program enables fresh graduates to learn about those

basic tools and methods that may be fruitful for them for their future concerns

in their practical lives. It brings confidence & motivation in addition to that it is

helpful to learn how to do a duty at a work place with experienced

professionals. Simply this training session is very beneficial for students.


My internship program in Accounts department of PEL (Pak Electron Limited)

provided me a lot of what I had not before. My learning, experiences, &

observations added a value in me that is comparatively profitable for me

regarding my studies as well as my future life. This training experience

enabled me to understand the basic concepts of business world and to

analyze the essential perspectives of business as its conformity deals with

this report.

Introduction

PAK ELEKTRON LIMITED was set up in 1956 as a joint venture with one of

the largest and renowned manufacturers of electrical equipment messrs. AEG


of west Germany for manufacturing Transformers, Switchgears and Electric

Motors etc. the entire job of machinery requirements and layout of the factory

building was planned and implemented by AEG who produced very well

balanced facility for the design and manufacture of the above equipment and

the commercial production was commenced on 22 November 1956. Up to

1962, when AEG finally phased out, the designing and manufacturing of all

equipment was carried out jointly by AEG experts and PEL personnel. PEL

staff, in the meantime, had received specialized training in USA and West

Germany which enabled PEL to establish itself as the leading manufacturers

of electrical equipment in the country with an excellent reputation for high

quality and thus PEL came to be known as “THE QUALITY CONSCIOUS

COMPANY”.

After conclusion of agreement with AEG, total share holding of AEG was

purchased by the then sponsors-Malik Brothers. The production continued

with AEG designs with much greater emphasis on the quality and reliability of

the products which earned unique distinction of supplying electrical equipment

to projects of paramount national importance like Mangla Dam and Tarbela

Dam Projects. PEL equipment was approved by consultants of international

repute including price cardew & Rider (England), Binnie & Partners (England),

Harza Engineering International (USA) and Miner & Miner International Inc.

(USA).

The majority shares were acquired from Malik Brothers by Saigol Group on 11

October 1978 and immediately on takeover the new management chalked out

both long term and short term plans to put the company back on the path of

progress. As a part of first phase of its BMR Programmer the new

management injected the additional working capital of Rupees 8.98 million

and Bridge loan of Rupees 7.50 million (against the public issue of its shares )


was provided by the ICP-led consortium. As a part of long term plans, the

manufacturing of window type Air Conditioners was taken up in 1981 and was

immediately established for quality.

The company launched the second phase of its BMR and expansion of

the existing product line in the 1987 and imported machinery for the

manufacture of Refrigerators and Deep-freezers for a total value of Rupees

22.11 million. For the project National Bank of Pakistan – the leading bank of

the company provided the financing. Like Air-conditioners these products

have also been well received by the local market which speaks highly of the

confidence, the consumer has developed in the quality products

manufactured by the company.

During the year 1990 the company has signed an agreement with

Messrs HITACHI of Japan for the manufacture of Vacuum Circuit Breakers.

The company has entered into an agreement with Pakistan Industrial

Credit and Investment Corporation (PICIC) for a foreign currency as well as

local currency loan of Rupees 25million for the expansion, balancing,

modernization and replacement of the existing plant. The machinery has

come into operation in October 1991 and with the balancing, modernization

and replacement of machinery, the production capacity of Refrigerator Section

will reach a Level of 252,450 cubic feet.

The management of the company decided to further expand its operation by

establishing a plant for the manufacture of compressor for refrigerators and

deep freezers. The technical know-how agreement has been signed with M/S

NECCHI compressor, Italy for the assembly and progressive manufacturing of

compressors for refrigerators and deep freezers.


Since its inception the company has always been contributing towards the

advancement and development of the engineering sector in Pakistan by

introducing a wide range of quality electrical equipments and home

appliances and by producing a number of engineers, skilled workers and

technicians through its apprenticeship schemes and training programs.

LOCATION AND FACILITIES

The head office is in Gulberg Lahore and the production unit is situated at 14-

k.m. Ferozepur Road, Lahore, and is spread over an area of 242 kanals and

15 Marlas of leasehold land in industrial area of Kot Lakhpat, Lahore, and

presently the total covered area comes to 232,883 square feet. Factory is

located on the main road where public transport is available round the clock

helping in easy access to the labor and customers.

TECHNICAL KNOW-HOW & FOREIGN COLLABORATION

The company had obtained technical know-how from General Corporation

(now Fuji General Limited) of Japan for the manufacture of its Air conditioners

and thus was able to produce a unit which is now preferred by the consumers

over all the other imported as well as locally manufactured units. The know-

how contract was for five years ending in the year 1988.

For the manufacture of Refrigerators, the know-how was obtained from

SILTAL CASA SPA of Italy, who are one of the major manufacturers of "white-

goods" in Italy and has assisted in the establishment of similar plants in many

other countries.

The technical know-how for Deep-freezers was obtained from ARISTON of

Italy who is the largest manufacturers of "white-goods" in Italy. They have also

helped lot of other countries in setting up similar projects for making "white

goods".

The company has obtained technical know-how from HITACHI for the

manufacture of Vacuum Circuit Breakers.


VISION STATEMENT

To excel in providing engineering goods and services through continuous

improvement.

MISSION STATEMENT

To provide quality products & services to the complete satisfaction of

our customers and maximize returns for all stakeholders through

optimal use of resources.

To focus on personal development of our employees to meet future

challenges.

To promote good governance, corporate values and a safe working

environment with a strong sense of social responsibility.

HR Vision

To achieve excellence through innovative HR practices and continuously

exceeding our PEOPLE Expectations.

HR Mission

PEL’s HR Mission is two-fold:


To manage talent and build capabilities of its people thus enabling them to

deliver sustained performance

To facilitate them in creating a collaborative work environment that develops a

culture of continuous learning

Major managerial policies, practices/styles

Employment policy

Working conditions

Leave policy

Health policy

Transition policy

Relocation policy

Insurance policy

Vehicle policy

Mileage claim policy

Car loan scheme for executive

Motorcycle loan for executive

Performance appraisal policy

Hotel/travel policy

Paid leave policy

Attendance policy

Compensation and other benefits

HR Values

Respect, Team spirit, Commitment & Customer Satisfaction.


Clients & Customers

PEL serves three types of customers/clients which include home users,

business clients and dealers.

PEL says:

Delighted customers are our first priority.

Customer service Excellent.

PEL has its dealers in 24 cities country wide.

ORGANIZATIONAL OBJECTIVES

By incorporating the essence of the mission statement in the company

branding line, company intends to create the desired image and achieve the

following objectives.

A high visibility level.

Heightened awareness amongst the target market.

To favorably mobilize the target market towards the organization and its

products.

Minimum cost for maximum projection.

Enhance the level of relationship with customers (corporate / individual)

and employees.

Upgrade teaching abilities, skills and knowledge of teaching staff.

Upgrade teaching equipment to the required standards.

Enhance the participation of private Sector in training activities at

Management level.

Prepare training plans, programs and projects keeping in view the local

as well as foreign manpower training requirements.

As stated earlier the corporate image will bring within its ambit all the

facets of the organization. The facets, which while specific in their

content, will corroborate the main branding, line. By unified approach all


the media will be utilized to build a strong corporate identity, which will

spill over into all facets (Marketing, Customer care, sales,)and within

the organization effecting a strong mobilization at every level achieving

one major objective “A stronger image of PEL”.

MANAGEMENT PROFILE

A committed team of highly qualified, experienced professionals, financially

sound and reputed sponsors manages the company. Through sheer

dedication, diligence and the Almighty’s Beneficence the management team

at Pak Elektron Limited have earned reputation for excellence in

manufacturing of electrical as well as home appliance and their marketing.

CHAIRMAN/CHIEF EXECUTIVE

Mr. Naseem Saigol


BOARD OF DIRECTORS

NAME DESIGNATIONS

Mr. Naseem Saigol Chairman / chief Executive

Mr. Azam Saigol DIRECTOR

Mr. Murad Saigol DIRECTOR

Mr. Zeid Yousaf Saigal DIRECTOR

Mr. Haroon Ahmad Khan Managing DIRECTOR

Mr. Muhammad Rafi Khan DIRECTOR

Mst. Neelofer Hameed NBP Nominee U/S 182 of The

Ordinance

Mr. Rizwan Hameed NBP Nominee U/S 182 of The

Ordinance

Mr. Tajammal H. Bokhree NBP Nominee U/S 182 of The

Ordinance

Mr. Wajahat A. Baqai NBP Nominee U/S 182 of The

Ordinance

COMPANY SECRETRY

Sheikh Muhammad Shakeel, FCA

AUDITORS

M/S Yousuf Adil Saleem & Company

Charted Accountants

(A member firm of Deloitte Touche Tohmatsu)

Advocates

M/S Hassan & Hassan

Business Overview


In 1948, the Saigols migrated from Calcutta and initiated their business in

Lyallpur (known Faisalabad), the textile city of Pakistan, under the banner of

Kohinoor Industries Limited.

Kohinoor Textile Mills

The Saigols set up the first major textile unit- The Kohinoor Textile mill under

the Umbrella of Kohinoor Industries Limited. The Kohinoor Textile Mill has

state-of-the art quality control from raw material the finished product

manufacturing Its laboratory is rated among the best laboratories in Pakistan

for testing of raw materials, other inputs, and yarn.

Initial Capacity 25,000 spindles

Current Capacity 147,620spindles

Annual Turnover Approx. $39 milllion

PEL (Pak Elektron Limited)

In 1956, the Saigol Group of Companies purchased major shares of PAK

Elektron Limited. At this junction, the company was only manufacturing

transformers and switchgears. With the Saigols in management, PEL

expanded into Air Conditioner manufacturing.

Now a day PEL comprises of two divisions:


Power Division

Appliance Division

POWER DIVISION


Appliances Division Power Division

Pak Electron Limited

SwitchgearsEnergy Meter

Refrigerators Split A/C Trading

Transformers

LG

PEL Power Division manufactures energy meters, transformers, power

transformers, switch gears, Kiosks, compact stations, & shunt capacitor etc.

All these electrical goods are manufactured under strict quality control and in

accordance with international standards.

PEL is one of the major electrical equipment suppliers to major power sources

like Water and power Development authority (WAPDA) and Karachi Electrical

Supply Corporation (KESC).

Over the years, PEL electrical equipment has been used in numerous power

projects of national importance within Pakistan. PEL has the privilege of

getting its equipment approved and certified by well-reputed international

consultants such as:

Preece, cardew and Rider , England

Harza Engineering company, USA

Snam Progeti, Italy

Societe Dumezm, France

Miner & Miner International Inc. USA

Ensa , France

In spite of stiff competition from emerging local and multinational brands, PEL

Group’s appliance and electrical equipments have remained in the spotlight

due to constant innovation. Strategic Partnership with multinational of repute

have enabled the PEL Group to incorporate new technologies into existing

product ranges, thus giving the Pakistani market access to innovative,

affordable and quality products. PEL’s usually power products are as;

TRANSFORMERS


PEL has vast experience in design and manufacturing of standard and special

purpose transformers. New technical designs for improved efficiency and

quality against special orders of non-standard transformers are continuously

being explored. These transformers are available for various applications.

I. Distribution Transformers

II. Auto Transformers

III. Furnace Transformers

IV. Welding Transformers

PEL transformers have been successfully type tested for impulse voltage and

short circuit tests by KEMA Laboratories of Holland. Customized

transformers, in accordance with domestic and international client

specifications have also been manufactured for use within and outside

Pakistan. Transformers are normally supplied in a period of 3 – 4 months

after the receipt of orders from respective distribution companies of WAPDA

and varied supply time for private customers. The company provides one year

after sales service warranty to WAPDA, DESC and private sector customers.

Main competitors are Siemens, Transfopower, Elmetec and Climax while PEL

having a market share of 38%.

POWER TRANSFORMERS


Extensive experience and success in manufacturing distribution transformers

led to the establishment of power transformer division in 2005. since its birth

the division has produced transformers of ratings 31/40 MVA, and 10/13 MVA

for rating up to 132 KV. In order to provide its customers the best of

technology and products of international competence, PEL has combined its

technical expertise with GANZ, a renowned and experienced Hungarian

transformer manufacturer.

PEL is also exporting Power Transformer to International customers for their

special Requirements and specifications. PEL power transformers are

equipped with best

Transformer accessories like OLTC from MR (Germany) , High Voltage

Bushing from PASSONI @ VILOLA (Italy), Buchholz Relay from EMB

(Germany), Insulation material from WEIDMANN (Switzerland), silicon steel

from THYSSEN (Germany), and cooling fans from SCHORMANN (Germany).

Material of the windings is usually 99.99%pure electrolytic copper. Multiple

conductors as well as CTC are used in winding. The magnetic cores are

manufactured from cold rolled grain oriented (CRGO) steel sheets. A robust

clamping structure, jointing technique and cutting and mitering of laminations

and laminations ensure low no load losses. The steel sheets in the core limbs

and in the yokes are clamped together by glass-epoxy bands.

Tank is constructed with boiler steel plates welded together and a cover plate

bolted on top. Strength is ensured by stiffeners. Ear thing terminal are

attached to both sides of tank. Measuring Instruments are installed on cover

plate. Surface protection is done by the process of sand blasting and by

applying weather resistant paint. Tap changers are in accordance with IEC

standards. Usually motorized On-Load tap changers are provided switch is

placed in hermetically sealed oil filled chamber in order to avoid contamination

of oil in main tank.

Distribution Transformers


PEL made distribution transformers’ range includes oil immersed core type

transformers, Dry type (VP impregnated) transformers and autotransformers.

These transformers are tailor made for various ratings. IEC or national

standards are followed. We offer distribution transformers voltage up to 33kv

and ratings up to 30MVA.

PEL offers transformer tanks with corrugated walls, detachable radiators and

tubular arrangement. The corrugated tanks have a better cooling efficiency,

since the fins are expandable. Tanks are hermetically sealed where possible.

In order to meet sophisticated requirement of customers PEL has also started

manufacturing transformers with foil winding. Foil winding efficiently uses

space which results in size reduction. It has better heat dissipation and also

increases potential to withstand short circuit current.

PEL transformers are available for various applications:

Distribution Transformers (Pole/ pad Mounted)

Auto Transformers

Furnace Transformers

Welding Transformers

Chokes for furnace Transformers

Any other special requirement

Dry Type Transformers

The demand of electricity in Pakistan has been increasing rapidly in the last

few years. There is a mushroom growth in the high rise buildings, shopping

areas, CNG and petrol stations, residential colonies, etc. Due to the scarcity

of space in cities, installation of conventional oil type transformers in such

congested and populated areas is always a big safety risk. The developed as

well as many developing countries are installing dry type transformers as a

solution for ensuring safety in such scenarios.


ENERGY METERS

PEL manufactures these types of energy meters; single Phase and Poly

Phase. The electro-mechanical energy meters are manufactured under

license from ABB of USA. The quality of PEL meters has been certified by

KEMA Laboratories of Holland. PEL meters are superior to others due to their

ability to lower revenue losses through accurate & precise operation and

reduction of maintenance expenses.

Energy meter orders from WAPDA are received annually and their supply

period is 9-10 months. Energy meter to KESC are supplied in a period of 3-4

months. The company provides one year after sales service warranty to

WAPDA, KESC and other customers. In the supply of energy Meters PEL

share accounts for 35% of the total supplies while the rest is shared by Syed

Bhais, Escort and Telephone Industries, A brief description of Energy Meter

is as under.

Single Phase Static Energy Meters

Single phase static energy meter used for measurement of active kwh energy

for Domestic & commercial consumers. The meter complies with the IEC

62052-11. IEC 62053-21. some of the main features include:

Capable of recording on the basis of current with assumed voltage and

power factor in the absence of voltage on its terminals.

Display of energy kwh during power outages.

High performance lithium battery with long storage life for display of

data during power outages.

Window based application software for configuration of parameters.

Anti-tamper indication on meter LCD

Ratings:

Description Whole Current Meter LT & HT Type Meter


Rated Voltage (UN) v 3*230/400 9*230/400 ,

3*63.5/110

Maximum Current (Lmax) A 60,80,100 6, 10

SWITHCHGRARS

Switchgears are one of the highly technical and specialized power products of

PEL. They are produced for indoor and outdoor installations complying with

international installation standards. A major customer fore this product is

WAPDA. The company provides one year after sales service warranty to

WAPDA, DESC and other customers. In Switchgear, PEL enjoys market

share 33% while competitors are Alstom, Siemens and Fico.

MV & LV switchgear are produced for indoor and outdoor installations. The

switchgear and their key components comply with the requirement of all

significant international standards and regulations i.e. IEC, BSS or VDE. SGS

UK has certified PEL Design & Manufacturing of Switchgear for ISO

9001:2000. PEL’s switchboards are steel sheet fabricated, totally enclosed,

floor mounting type and vermin and dust proof. These are supplied with

factory fitted components, copper bus bars, internal wiring and terminal blocks

etc.

PEL’s Services:

Transformers as one of the major component of AC power system, empower

the generation, transmission and distribution of electrical energy at proper

voltage level. There are different types of transformer e.g. Auto, Power,

Industrial, Rectifier, Furnace, compact, ear thing, and reactors network

transformers used for purpose of energy transmission, isolation of two circuits,


impedance adjustment of two sources and their loads, in accordance with

their unique specifications.

PEL offers complete testing, maintenance , modernization, upgrade and

repair services for power and large distribution transformers. The services

include but not limited to:

Testing, erection, installation, commissioning, supervision, renovation,

rehabilitation, painting and reconditioning.

Tap changer overhauling and repair

Oil cooler, pump, and radiator change out.

Technical & Engineering Support

Customer support regarding transformer purchase as per customer

specification and requirements.

Rating selection(KVA/MVA)

Voltage selection (primary / secondary voltage)

Vector group & percentage impedance selection

Cooling art selection

Components / accessories

Offering efficient and economical solutions from operation and

maintenance point of view.

Consultancy / Expertise

Fault investigation


Trouble shooting

Condition assessment

Capacity enhancement

Customer Training

Product / operation training

Product maintenance training

Risk assessment training

APPLIANCES DIVISION

This Division of PEL consists of appliances manufacturing. The Appliances

Division of PEL is the pioneer manufacturer of electrical goods in Pakistan.

The Division’s product portfolio comprises of air-conditioners, refrigerators,

televisions, microwave ovens, and split air-conditions. PEL is one of the

three leading players in the home appliances market. The company is

engaged in the manufacturing an/ or marketing of the following home

appliances.

PEL Air Conditioners

PEL window-type air conditioners were introduced en 1981 in technical

collaboration with General Corporation of Japan. Ever since their launch,

PEL air conditions have a leading position in the market. PEL air

conditioners cooling performance has been tested and approved by

Copeland and ITS USA. With the shift of users preference from window

type of to split type air conditioners, PEL has started manufacturing split

type air conditioners.

PEL Refrigerators


The manufacturing of refrigerators started in 1986-87 in technical

collaboration with M/s IAR-SILTAL of Italy. Like the air conditioner, PEL

refrigerators are also in great demand. Today, PEL Crystal has 30%

market share. Its cooling performance is tested and approved by Danfoss,

Germany and its manufacturing facility is ISO 9002 certified by SGS

Switzerland.

PEL Deep Freezers

PEL deep freezers were introduced in 1987 in technical collaboration with

M/s Ariston of Italy. Because of durability and high quality, PEL deep

freezers are preferred choice of companies like Unilever.

Besides PEL Appliance division is proficient in production and marketing

of other domestic products like Microwave ovens, Washing machines, TV,

& some other similar types of items.

Associated Companies

The following are the associated companies of the Company as section

2(2) of the Companies Ordinance 1984.

Kohinoor Industries Limited.

Kohinoor Power Company Limited.

Kohinoor Energy Limited.

Azam Textile Mills Limited.

Saritow Pakistan Limited.

Saigol Brothers Limited.

Guarantee Life Employment Limited.

Progressive industries (Lahore) (Private) Limited.

Art Center (private) Limited.


Saigol (private) Limited.

Conforce (private) Limited.

Kohinoor Autos (private) Limited.

Kohinoor Tractors (Private)

Innovative Technologies (Private) Limited.

Raytex (Private) Limited.

Standard Grinding Wheel Industries Limited.


Major Competitors in Appliances

Division

Dawlance

Waves

Haier

Mitsubishi

Orient

Singer

Panasonic

Major competitors in Power Division

Seimens

Climax

Transfab

J&P

AB Ampere

Ahmad & companies

Feco

Areva

Fico

Pempam

Tariq Electric

Syed Bhais

Microtech

Escort

SB Electronic

Creative Electric

Organizational Hierarchy


My Learning


Managing Director

Chairman

GM Marketing

(Appliances Division)

GM Finance GM Manufacturing

(Power Division)

GM Marketing(Power

Division)

Sr. Manager(Foreign

Procurement)

Sr. ManagerFinance

GM Manufacturing

(Appliances Division)

Manager Commercial

Sr. ManagerMarketing

(Power Division)

Sr. Manager Marketing.(Appliances

Division)

Sr. Manager QC.

(Appliances & Power)

Sr. managerHR & A

Managing Director

Being a graduate in commerce with specialization in Finance &

Accounting, my training session was conducted in the accounts

department of PEL. I was strongly encouraged by each and every person

there and so I learned a lot from there. A complete summary of my

internship period is as follows.

Inventory

Accounts Payable

Costing

Imports(L/C)

Payroll

Assets Management

Reporting

Some of the above have relevant sub-sections that will be discussed here.

Inventory Section

The inventory section of PEL handles the activities of stock dispatch as well

as the stock taking procedure. Concerned departments raise “indents” or

requests to the local procurement section as per their requirements. PEL’s

procurement department uses four types of purchases as:

Credit Purchases:

It includes purchases by procurement department from suppliers’ on

credit. A “purchase Order” (PO) is made that bears the quantity computer

code rate and value drawing and all the specifications of required items.(PO)

also bears the terms and conditions of payment and delivery schedule

according to production plan.

Suppliers Direct Purchase:


In this case neither (PO) is made and nor indents are raised. The

purchase is made directly and is usually for small additional items requires in

emergency.

Cash Purchase:

In this type of purchase materials are supplied to the local vendor for

Die casting, Molding, Chroming=, Machine printing, Powder coating etc. in

other words we may say that materials are given and some work is performed

on those materials and for these services, the local vendor is paid. Vendor

claims only processing charges.

Further Procedure:

When items are purchased, through any type of purchasing method

mentioned above, procurement section makes “Purchase challan” against the

cash memo or delivery challan provided by the suppliers. The supplies are

then sent to the stores.. in the stores, the keeper checks the items according

to the delivery challan. If he finds any discrepancy, he mention it on the

challan,. After counting, weighing, measuring the goods as per their nature,

he makes a goods receipt note (GRN) and hands the goods over to the

Quality Control department. Quality Control examines the goods to see

whether they match the required standards or not. Defective or sub-standard

items are returned. Remarks or reasons for rejection are mentioned on the

(GRN) by the Quality Control department. After checking for quality and

subsequent approval Quality Control sends the item back to the receiving

store, store-keeper assigns the goods a serial number and date on their

(GRN). Now the receiving store process is OK. After this the store-keeper

sends the items along with their (GRN) to the relevant store, relevant store-

keeper further re-checks the material according to the (GRN) and makes entry

on his Bin Card. Material is now officially stored. The store-keeper now sends


the (GRN) to the accounts department where it is posted in the Stock Ledger

after its valuation.

Diagrammatical View


Overall procedure of inventory section may be represented as follows:

Production Department (Requirements)

Concerned Department (store)

(through intends)

Procurements Section (PA or AD)

(through any purchase type)

Suppliers

(makes delivery)

Gate Entrance (through physical check & IGP is issued)

(A challan is formed & GRN is

Made)

Quality Control Section (Inspection)

Store

Concerned Department (for Production)


Quality Control & AssuranceAppliance Division

Single Sampling Plan for Special Inspection

Inspection Level S4 at Acceptance Quality Level 4.0

Lot or Batch Size Sample Size Acceptance Rejection1 1 0 12 2 0 1

3 to 90 3 0 191 to 500 13 1 2

501 to 1200 20 2 31201 to 10000 32 3 410001 to 35000 50 5 635001 to 500000 80 7 8500001 to over 125 10 11

Purpose of Inspection:The purpose of these procedures is to establish uniformity and

consistency in the quality assurance of material and components received from supplier by incoming quality control.

Issue Procedure:

Production department when in need of material sends a “Production Request

Form” to the stores. The form consists of items code, quantity, fabrication

number, cost center number etc. the department head must approve of this

request. It is then sent to the relevant store for issuance, if available stock is

issued after completion of some formalities such as store allocation etc. if

there is any difference in requested quantity and that what is available the

store-keeper change that quantity and posts it on the Bin Card. After posting

into Bin Card, store-keeper sends the request to Accounts department.

Accounts department allot serial numbers automatically along with date and

value before the incorporation in the ledger. In this way the all materials sent


to the various departments are of high quality and are made available as per

the need of the particular department.

TASK:

In this section I completely learned the overall activities of receipt and

issue procedures of materials through built in software there.

Accounts Payable section (APS)

(APS) handles pending payments. Here payments are given to the creditors,

venders, and other parties. Payment is done through check and cash. If

payment is less than 10,000 then it can be in cash form, but if payment is

more than 10,000 then cheque is drawn in the name of creditor. Simply book

keeping of daily monetary transactions is APS. The Accounts Payable section

basically deals with the credit portion of the balance sheet of a company. The

process of payables also starts with the particular department making a

request or indent. The indent is sent to the Purchasing/Procurement

department. A representative of Power division or Appliances division goes to

the market and gets a quotation from the supplier parties. The rates are

verified and then further approved. After an approval. A purchase order (PO)

is made and sent to the supplier who has the lowest or most competitive rate.

On the arrival of goods an “Inward Gate Pass” (IGP) is made. This is also

known as an “IGP” to check because it is of a temporary nature. Quality is

then approved from Quality Control. If acceptable then “IGP” ok is made.

Next step is the making of the Good/Materials Receipt Note. This is made on

the arrival of goods. It is basically a voucher of the stores department.

The goods are reached to the store and from there a “Store Issue Note (SIN)”

is made when the goods go to the requisite department which raised the

indent,. When the materials are received a bill or sales tax invoice is made by

the supplier. In case of a listed company, a sales tax invoice is made and


incase of a non-listed company a bill is made. The (GRN) so made may be of

different types regarding the various departments.

S stands for switch-gear, T for transformer, P for power, Q again is

transformer division, N stands for energy meter and so on.

Apart from goods purchased, payables also stand for expenses. Expenses

booked are of three types like:

Selling expenses, Administration expenses,

Manufacturing expenses, all three of the expenses are booked with unique

expense Ids, first 2 digits of the ID tell the type of expenses, the next 2 digits

which are separated by a hyphen, stand for the division i.e. Appliances or

Power , the 2nd last figure signifies the department and the last figure tells the

area i.e. whether it is inland, local or foreign from the recording point of view 2

entries are basically made.

When the goods are reached to store and (GRN) is made, the following entry

is made in the journal:

Material Accounts

Provisions Account

Provision account is a temporary account which is zeroed through (GRN). A

contra-entry is passed for the purpose.

Provision account

Excise duty account

Sales tax account

Party account

Provision account is ended and excise duty and sales tax are charged to the

party

Party account

Bank account

In this entry the party is clearing all dues by payment through bank.


Diagrammatical View

Overall procedure of APS may be represented as follows:

Sales invoices or Bills (From creditors)

Journal Account (Material A/c

Party A/c)

(Through invoices)

Voucher preparation

(Invoice, voucher & GRN0

Attachment

(Makes delivery)

Supplier’s Request (For payment through buying department)

(By compliance with necessary formalities)

Payment Preparation (Through crossed cheque)

(By deducting 3.5% withholding tax for particulars)

Payment done (through cheque or cash)

(Tax is paid to FBR & claimed hereafter)

Accounts Entries (Party A/c

Bank or Cash A/c)


Sales Tax

Sales tax is the tax which is deducted directly on purchase and is included in

the retail price of the goods. As per new budget, it is 16% of the cost price of

the goods. On some materials it varies e.g. on chemicals it is 20% of cost

price.

When PEL purchases goods from suppliers, it is obliged to pay sales tax on

these purchases. This is known as input tax as it is so charged from us. On

the other hand we sell goods we are charging sales tax also from the

consumer. This is known as output tax, as we pay it to government and it is

basically being charged by us. If the input tax on purchases is greater than the

output tax on sales then the company tax payer is eligible for a refund. In case

output tax being greater than input tax, we have to make payments to the

government. Sales tax is paid through special sales tax returns. These returns

show the net value of output and input tax.

Each supplier from whom the purchase goods sends us a bill if he is non-

listed i.e. does not poses a national tax number (NTN) of its own. Sales tax is

however still written on the bill. In case of a registered supplier who poses an

NTN, a sales tax invoice is sent which consist of the NTN of both purchaser

and supplier, the value of goods purchased and the sales tax so calculated on

these purchases. The original copy of the sales tax challan is sent to the

commercial department,

Excise duty so paid is separate from sales tax. It is basically an output tax

which is government income. The government at any time may demand a

sales tax audit. The audit is managed by the commercial department. The

following documents for each sales tax transaction have to be made available

namely:

Sales tax invoice

Goods receipt note (GRN)

Cheque


Bank statement

Few rules pertain to this audit e.g.

The payment of amounts above Rs. 15,000 is made through cheque

with in 90 days.

Below Rs 15,000 payments are made through cash.

In case of delayed payment fine is charged.

Income Tax

Income tax is also dealt in the Account department the tax is called

withholding tax also. It is at the rate of 3.5% of supplier, 6% on services, 5%

on rent paid and 2% on freight paid for transportations.

Income tax payments are made on daily basis to the State Bank Of Pakistan

by PEL.

Payments of tax is made through a withholding tax challan, which consist of

purchaser (i.e. PEL in this case) details on top name, NTN, registration

number etc, next comes the list of suppliers from whom sale tax is deductible

on the current date. The cost of purchases made from them and the taxes cut

are shown.

The challan is submitted to the bank and a temporary receipt/token is given.

After 3 days the challan is returned with a stamp that is proof of payment.

In the same way taxes on the salary of employees is deducted, retained and

then sent to the State Bank of Pakistan. Through payment of tax, refund may

be claimed for taxes on utility bills etc, the advantage to the supplier is that

now he may take refund of the withholding tax challan form PEL and send it to

the Federal Board of Revenue (FBR). This is proof that taxes on purchase

from them have been paid. The FBR then asks PEL for approval. The supplier

also writes to PEL to verify their challan. PEL provides its suppliers with a

certificate which shows that their taxes have actually been deducted before

hand. This along with the copies of challan is send to FBR.


PEL makes daily payments of taxes to the bank. The Finance and Accounts

department have decided between themselves, the maximum value of sales

tax to be paid per day and funds are arranged for this payment by the Finance

department, so that cheque for payment of taxes are easily cleared and do

not bounce.

Task:

In this section I learned the internal operations of payment system by

personally practicing through preparation of the vouchers, posting of GRN,

verifying amounts and quantities of stock as according to vouchers, BRN, and

transactional reports (records) in order to avoid the dual discrepancies, mostly

APS involves the usage of software so too observed the coding system.

Besides I too learned to make details for audit work by having view of

previous vouchers of CP, JV,& BP respectively etc.

Costing

PEL uses job-order costing method. The two main product divisions of PEL

are appliances division and power division. Both divisions use similar costing

methods, save that in appliances division specific job-orders are not made

because the party is not defined. Appliances sales are usually to individual

consumers as per their requirement. A Cost Control System (CSS) is used to

control the costs of the products manufactured, production planning is both

month-wise and annual. After production plans are made, orders are made for

request of raw material. Orders are made on “production Order Forms” which

is made in the production department. Each order has a Fabrication Number.

This number has a special significance. The 1st figure is the division code, the

2nd figure is the product code, the 3rd figure is the nature of the job and the rest

is just the serial number.


PEL’s specially designed software is used to keep track of the number of

orders. Quantities, fabrication number, model number and date are fed into

the system to get the rest of the information required. At any point of time, this

information may be fed in for a particular order to see up to what extent it has

been fulfilled, how much of the order is yet to be fulfilled, whether it is in parts

or the whole order has been demanded at once, so on and so forth. Another

important document formed is the “Bill of Quantity” (BOQ). This bill shows the

quantity of material that shall be used for the order in question. Issuance of

material may be of two types also. Incase of normal or routine issue the term

“issue Normal” (IN) is used and incases of any excess issuance an “excess

Voucher “ (EX) is made. Apart from the main materials, extra materials may

be required for a particular order. This may be the case when wastage takes

place e.g. when a required shape of metal is cut from the sheet provided, the

metal on the sides is extra and is scrapped. In some orders “auxiliary

materials are used which are not required in all orders. These are accounted

for also.

Further the costing of the product takes place. For this the cost of the three

basic parts required to make a product are calculated namely;

Materials

Labor

Factory overhead

If the materials value is not present actually, it is taken from the “Bin Card”

which is a document made especially for each item. It records quantity issued,

quantity received and balances. Standard quantity is used in calculations. For

the cost of labor, Inspection Report is used. The value from inspection report

is multiplied by labor hours and labor rate. Factory overhead is taken as a

percentage of the labor value. These calculations are done for the budgeted

production or those numbers of units that we have forecasted that we will

produce. If the total production in actual is not equivalent to what we


calculated, then the system will adjust the number of units and find out cost of

units actually produced.

Task:

In costing section I experienced the costing methods, techniques, & other

procedures followed by PEL. Usually there is built-in software being used by

costing section named as FOX PRO but now it is being changed to ERP

(Enterprise Resource Planning) for budgeting and for other costing section

requirements. By observing sales advice, BOQ , Inspection report, system

flows I became able to understand each and every step of costing section

working. Besides I performed several calculations based on rates, quantities ,

& specifications in order to be assisted that in preceding audit job.


Diagrammatical view

Overall procedure of Costing section may be represented as follows:

Job Orders (From clients to marketing department)

Sales Advice (From marketing to QC, A/c, &

Manufacturing department etc.)

(By material and planning department)

Worker Order Preparation (Having FB. No & T. to A/c dept.)

(Processing to finished goods)

Production Department

(Inspection of Foreign goods)

Quality control department (Report to A/c, PD, TM & others)

Finished Goods (To store)

Evaluation of Cost (Through charging Mat., Lab., & FOH)

(Dispatch of Foreign goods to clients)

Further formalities (For Reporting)


Imports (L/C)

Letter of credit or (L/C ) is used as a bridge for payment between importer &

exporter. Suppose PEL has gotten some raw material imported from a foreign

country etc. China. The exporter may want some guarantee that the money

will be paid to them. An assurance from a local bank may not be satisfactory

to the exporter. To solve this problem the importer gets an (L/C) opened by a

local bank called the issuing bank. The issuing bank will coordinate with a

bank will coordinate with a bank in the exporter’s country known as the

advising bank. It is so called because it advises the exporter whither or not to

carry out this transaction. If this bank also known as the confirming bank. The

exporter after preparing the goods intimates the advising bank and gives them

the documents of the goods. In case of sight (L/C) where immediate payment

is demanded the advising bank after receiving payment from the issuing bank

forwards the document to them. The issuing bank gives these documents to

the exporter so that he may get the goods released from customs. Payment is

mad later on by the importer. The bank charges markup on the facility

provided which is payable on a monthly basis. The issuing bank also fixes the

max time for repayment of the money. The importer must pay the bank within

the stipulated time to maintain good relations with the bank. Also the importer

may have a maximum credit limit with the bank within which he must remain.

In this case a new (L/C) may be issued only if dues of the old one have been

paid. The second main type of (L/C) is the Usance (L/C).in this type payment

is made after a period of time. The time is basically multiples of 30 i.e. 3,4 or

months. A number of extra charges are also included which are commission

of the bank and federal excise duty (FED). These are the charges which will

be payable if the payment is not made at the maturity date. In event of

payment at maturity only the basic value which is fixed beforehand is payable.


Task:

In this section I observed the routine system of Letter of Credit of PEL

whenever it imports any material from foreign suppliers. I was also sent to

commercial department to know more about L/C through that source I got

enough valuable information fruitful for my further concerns.

Diagrammatical view

Overall procedure of Imports (L/C) section may be represented as follows:

Production department (Requirements)

Procurement department (Analysis local or foreign purchase)

(In case of foreign material)

Import Section (Contact and evaluate foreign suppliers)

(Processing to finished goods0

Opening of L/C (Sight or Usance through bank)

(Deliveries of Foreign goods to PEL)

Suppliers (Too shipment documents through own bank)

(Receiving documents and makes payment)

Importer’s Bank (Through exporter’s bank to supplier)

(Receives foreign goods and makes payment to its bank)

PEL (During a period with commission and others etc.)

(Overall information)

Accounts Department (For records)


Payroll

There are two sub sections of payroll section;

Salary

Benefits and other expenses

So payroll section is managed by two persons. Whenever a new person is

recruited at

PEL the Human Resource (HR) department prepares an appointment letter. A

photocopy of this letter as intimation is sent to the Account department having

details about basic salary and allowances etc. this person is then formally

added to the payroll section of PEL. The salary period for the staff is from 25 th

of the last month to the 25th of the coming month. For workers the salary

billing is from 1st to 30th of the same month.

At the end of month, all the appointment letters of that month along with the

salary details is sent to the (HR) department to check for any discrepancies.

The marking of attendance for both the graded staff and the non-grade staff

i.e. workers and peons etc is in the same manner. When the employee walks

in, the time of his arrival is noted down at the gate. Graded staff has two

attendances, one being at the gate and one on an attendance register once

they reach their requisite department. Non-grade staff has one attendance.

Payroll is managed through the specially designed software of PEL.

Full profile of the employee is maintained in the database of the software

namely: name, father’s name, date of birth, area of work etc. This profile

information is forwarded by Human Resource Department who collect it in the

first place through forms provided to the new entrant.

Salary definition is a separate file which gives details/break-up of salary of an

employee. It consists of some important parts like Basic salary; House rent

allowance, utilities, Conveyance, and other special pays etc.


At the 25th or 26th of the month, the data pertaining to amount of salary and

attendance are up-dated. Shifts, over-time working and leaves are taken into

account.

Deduction file shows the details of all deductions or advances taken against

salary. If workers wish to take food items from PEL’s personal stores, supply

deductions are made.

Lastly non-graded employees use the canteen for tea and snacks etc. they

are given coupons and deductions are made from their pays as per their

expenditure.

The Salary Processing File deals with updating the employee database

incase of new entrants, deleting the unnecessary information of employees

who have resigned. Details regarding increment, promotions, attendance,

overtime leave, loans taken by employees and any goods bought on

installment basis by the employees.

Salary slips are made at the end of each year. Salary of managers is dealt

separately in the finance department. PEL pays provident fund but does not

provide the facility of gratuity. Provident fund deductions are made at the rate

of 4.5% of basic salary for supervisors, 4% of basic salary for junior

executives and 3% of basic salary for executives and managers. Bonuses are

paid on Eid-ul –Fitr, Eid-ul-Azha and a final one is paid in august. Increments

are made in October. Payment of salaries up till Rs 15000 may be in cash,

above this payment is made through cheque. PEL’s main bank is National

Bank of Pakistan (NBP) though which all payments are made. For people

without bank accounts, demand drafts are made.

A part from salary payments, there are provisions for medical allowances

also. In this case all documentary proof is required. In case of hospitalization

or doctor’s prescription and all hospital bills are to be attached and

documentary evidence for refund of money. The head of department must be

approved the bill and then they are sent to the main administration


department for final approval. Finally they are sent to accounts for recording

and subsequent payment. For non-grade workers there is a system of social

security.

Workers are allowed 14 holidays per year, 10 days are allowed as casual

leave and 8 days for sick leave. Executive are allowed 30 holidays per year. If

one year leave has been used up then holidays from the next year may also

be availed in that year. Information of leave comes from the Human Resource

department for graded employees. Industrial relation and administration

department deal with the non-grade employee leaves. Both departments

subsequently send information to accounts department.

Task:

In this section I experienced all the formalities like voucher preparation,

expenses entries in ECM as well understood clearly the coding system of

expenses.


Diagrammatical view (salary portion)

Overall procedure of salary portion of Payroll section may be represented as

follows:

Recruitment & Selection (Through HR or IR & A)

(Intimation of Basic salary, allowances etc.)

Accounts Department

(Input of general information)

ECM (Employee Cost Management)

Accessing (available data & details)

(For information)

IR &A

(Recalled information)

Accounts section

Salary Preparation (After additions & deductions)

(Through bank or cash)

Salary Payments


Diagrammatical view (Expenses & Benefits Portion)

Expenses & benefits portion of Payroll section may be represented as follows:

Bill (From client write any expense or facility like Advance, medical,

or traveling etc.)

Verification of Bill

(All expenses details)

In ECM

(Bank or cash form)

Voucher Preparation

Attachments (Bill & vouchers)

(By senior official)

Checking

(Final signature)

Approval of expense

Payment (Through bank or cash)


Accounts Payable system

New Supplier Account Creation Procedure:

A requisition is raised by the Buying & other concerned department for

opening new party code. Buying department provide following information for

Example;

Supplier Name

Address

Telephone #

Fax #

Contact Person

E-mail Address

NTN #

Sales Tax

Payment Term

Verification Process (FBR)

After collection of all detail about the party it is cross verified from

(Federal Board of Revenue). Party’s STN verified from FBR site.

Completion Process:

After verification new account is open according to Division

(Appliances, Power, and Common).

ACCOUNTS PAYABLE SYSTEM

Following reports/ out put are available on APS system:

I. Purchase Voucher Report with GRN Support.

II. Debit Note Report


III. Bank Payment Voucher along with invoice detail

IV. Due Date Report (Due Payment)

V. Payment against Cash Purchase

VI. Party ledger

VII. Creditor Aging

VIII. Creditor Reports – Product wise

IX. Month wise Creditor Reports

X. Suppliers Payment Aging Report

XI. Suppliers Income Tax Challan Printing

XII. Supplier Income Tax Return on Monthly , quarterly and annual basis.

XIII. Supplier income tax Certificate

XIV. AP Voucher for Journal Ledger Posting

XV. Missing GRN Report

XVI. Party cheque Printing

XVII. Detail of Bills which is sent to vendor with cheque

XVIII. List of purchase Vouchers / Bank Payment Vouchers

XIX. Invoice Register


Assets Management Section

Overall procedure of Assets Management section may be represented as

follows:

Purchase voucher (Through any section like Inventory, APS, or other etc.)

Assets management Section (For depreciation charge)

(For accessing depreciation)

Separation (Of fixed assets & division in sub section)

(Through diminishing balance method)

Depreciation Charge (By recalling previous statements)

R.M.C (Assets amount for reporting & for balance sheet)

Explanation:

In this section of Accounts section depreciation is evaluated of fixed assets

only. Any financial transaction done through any section like APS, inventory or

any other section by means of voucher is brought down here. Form that

voucher fixed asses treatment is brought under consideration by dividing into

its sub sections where from depreciation is charged according to diminishing

balance method & as according to software. The whole process includes the

amounts of previous year’s amount also. Finally total amount of given assets

under each section head is rounded off & and reported to the higher


authorities of the development of balance sheet as well as fro further

concerns.

TASK:

I thoroughly observed the overall system of depreciation through annual

report and too understood the basic concepts of depreciation methods as well

as prepared details on assets like vehicles.

Reporting

Reporting section delivering information of multiple activities observations as

well as expenses verifications.

Overall procedure of Reporting section may be represented as follows:

Costing Section (Variances)

Work in Process (Current Assets-Current Liabilities)

Journal Ledger or other Reports (Vouchers Verification of Expenses)

(For Decision Making)

Higher Management


Explanation:

In this section all the information drawn from costing, work in process, &

journal ledger section is sent to the higher management for business

concerns. This process is done after having a complete verification like in

case of costing section, time & rate variances are observed and in case of

work in process, current assets & current liabilities are treated for calculations.

Similarly fro journal ledger or other sections, the expenses like TA & DA are

verified carefully.

TASK:

In reporting section I knew how to prepare a report and how to precede it with

higher authorities. Besides I experienced to observe the verification of

monetary transactions done in the multiple sections of the accounts

department.


Financial Sector

PEL is a public limited company and is listed in Lahore, Karachi and Islamabad

stock exchanges. PEL deals with all of the following banks for its loans and savings:

National Bank of Pakistan

Bank Alfalah Limited

Bank of Khyber

Bank of Punjab

Deutsche Bank

Faysal Bank Limited

KASB Bank Limited

Meezan Bank Limited

My Bank Limited

NIB Bank Limited

Royal Bank of Scotland Limited

SILK Bank

Soneri Bank Limited

Dawood Islamic Bank

Habib Metro Molitron Bank


Financial Statements Analysis

Ratios Formulae

Current Ratio current AssetsCurrent Liabilities

Quick Ratio Current Assets-inventoryCurrent Liabilities

Inventory Turnover Cost of Goods SoldInventory

Average Collection Period Account Receivable Average Sales Per Day

Total Asset Turnover Sales Total Assets

Debt Ratio Total Liabilities Total Assets

Gross Profit Margin Gross Profit Sales

Operating Profit Margin Operating ProfitSales

Net Profit Margin Earnings for common stockholdersSales

Return On Assets Earning for common stockholders


Total Assets

Return On Equity Earning for common stockholdersCommon Stock Equity

Earnings Per Share Earning for common stockholders No.Of Common.Shares.Outstanding

Financial Ratios & %change Analysis

Rations 2008 2009 Difference %change

Current Ratio 1.43 1.33 -.10 -6.99

Quick Ratio .89 .83 -.06 -6.74

Inventory Turnover 2.74days 3.46days .72 26.27

Average Collection

Period0.935 0.316 -0.619 -66.20

Total Asset

Turnover0.777 0.767 -0.010 -1.29

Debt Ratio 0.654 0.644 -0.010 -1.53

Gross Profit Margin 0.225 0.229 0.04 17.78

Operating Profit

Margin0.34 0.31 -0.03 -8.82

Net Profit Margin 0.36 0.18 -0.18 -50

Return On Assets 0.28 0.14 -0.14 -50

Return On Equity 0.081 0.038 -0.043 -53.09

Earning Per Share 4.14 2.17 -1.97 -47.58


Vertical Analysis

Final Analysis

Ratios % Change Company’s Favor

Current Ratio -6.99 No

Quick Ratio -6.74 No

Inventory Turnover 26.27 Yes

Average Collection Period -66.20 No

Total Asset Turnover -1.29 No

Debt Ratio -1.53 Yes

Gross Profit Margin 17.78 Yes

Operating Profit Margin -8.82 No

Net Profit Margin -50 No

Return On Assets -50 No

Return On Equity -53.09 No

Earning Per Share -47.58 No

Note:

All the amounts are drawn from the financial statement of PAK ELEKTRON LIMITED

as according to annual report of 2009 and all the calculations are performed

manually.


Profit & Loss

Profit &

Loss

PEL SINGER

2009 2008 2007 2009 2008 2006

Gross Sales 16,118 13,927 13,078 2,349 1,924 1,568Less : Sales

Tax & Discount

1,496 1,275 1,264 480 423 340

Cost of Sales

11,284 9,815 9,224 1,478 1,225 1,002

Gross Profit 3,338 2,837 2,590 448 359 280Gross profit

- %22.83 22.42 21.92 23.26 22.66 21.84

Other operating Income

37 18 100 5 9 6

Administrative

expenses609 514 387 36 30 26

Profit from operations

1,874 1,665 1,684 207 160 123

Finance cost / Net of

Income 1,373 994 937 125 86 71

Provision for Taxation

133 178 125 16 20 12

Profit / (Loss)

260 452 582 53 43 32


Horizontal Analysis (Profit & Loss)

Profit &

Loss

PEL SINGER

2009 2008 2007 2009 2008 2006

Gross Sales 15.73% 6.49% 18.44% 22.09% 22.70% 20.62%

Less : Sales Tax &

Discount 17.33% 0.87% -22.64% 24.41% 18.88% 21.19%

Cost of Sales

14.97% 6.41% 25.33% 20.65% 22.26% 17.88%

Gross Profit 17.66% 9.54% 26.46% 24.79% 28.21% 30.84%Gross profit

- %1.81% 2.28% 0.71% 2.63% 3.77% 8.59%


105.56% -82.00% -11.50% -44.44% 50.00% 50.00%

Administrative expenses

18.48% 32.82% 47.15% 20.00% 15.38% 18.18%


12.55% -1.13% 28.84% 29.38% 30.08% 30.85%

Finance cost / Net of Income

38.13% 6.08% 26.28% 45.35% 21.13% 57.78%


-25.28% 42.40% 66.67% -20.00% 66.67% -29.41%

Profit / (Loss)

-42.48% -22.34% 31.67% 23.26% 34.38% 28.00%


Vertical Analysis (Profit & Loss)

Profit &

Loss

PEL SINGER

2009 2008 2007 2009 2008 2006

Gross Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Less : Sales

Tax & Discount

18.01% 17.67% 18.24% 18.01% 17.67% 18.24%

Cost of Sales

62.92% 63.67% 63.90% 62.92% 63.67% 63.90%

Gross Profit 19.07% 18.66% 17.86% 19.07% 18.66% 17.86%Gross profit

- %0.99% 1.18% 1.39% 0.99% 1.18% 1.39%


0.21% 0.47% 0.38% 0.21% 0.47% 0.38%

Administrative

expenses1.53% 1.56% 1.66% 1.53% 1.56% 1.66%


8.81% 8.32% 7.84% 8.81% 8.32% 7.84%

Finance cost / Net of

Income 5.32% 4.47% 4.53% 5.32% 4.47% 4.53%


2.94% 3.27% 2.81% 0.68% 1.04% 0.77%

Profit / (Loss)

2.26% 2.23% 2.04% 2.26% 2.23% 2.04%


Balance Sheet

Balance Sheet 2009 2008 2007

Fixed Capital Expenditure

10,304 6,907 4,628

Current Assets 8,713 9,401 6,8701. Stores, spares

and loose tools77 82 64

2. Trade deposits and prepayments

229 322 306

3. Advance Income Tax

292 87 47

Total Assets19,070 16,395 11,545

Current Liabilities 6,555 6,605 5,1781. Advances

from Customers

137 169 111

2. finance lease 86 100 103

Long Term Liabilities 6,796 5,618 4,063

1. Long-term loans

3,493 2,480 1,315

2. Liabilities against finance lease

103 170 187

3. Long-term loans

3,493 2,480 1,315

Total Liabilities 19,070 16,395 11,545


SWOT Analysis

STRENGTHS

PEL has the following strengths and is in more competitive position in these

areas than its competitors. Following are the main strong points of PEL:

Strong brand image

Strong dealer network

Strong quality, sale and service

Market leader in WRAC

Number 2 in refrigerators in Pakistan

Strong grip in home appliances

Strong Management

Distribution of Authority

Strong research and development department

Free customer service

Strong Brand Image

PEL has created the strong brand image in the mind of the customers through

higher quality and low price. The customers of the PEL always prefer to buy

the PEL home appliances like WRAC split AC and refrigerators whenever


they wanted to buy. PEL is a popular company in Pakistan and every one

knows about the PEL products and its brand. That’s why PEL selling of

WRAC are very high in the market than the competitors selling.

Strong Dealer Network

It is also the plus point for the PEL that it has also developed the strong dealer

network in the market. The dealers are always trying to sell the PEL appliance

to the customers because they know there are high margin in the PEL

products. They can get more money after selling the PEL products. The

management of PEL also provides more incentives to their dealers than their

competitors. Dealers are very conscious about the PEL products and always

guide the customer in buying the PEL appliances and tell them the more

qualities of PEL products than others products

.Strong Quality, Sale and Service

PEL is also in a strong position that it provides the superior quality to your

customers. It makes sense in the mind of the customers that PEL products

are better in quality than the other companies’ products. PEL also provides

the after sale service to their customers which delight the customers

satisfaction. It is another way to advertise the products because when

customer is highly satisfied then he tells the other ten persons that they

should buy the PEL products. It is the free publicity of PEL products that PEL

Company gains.

Market leader in WRAC (Window Room Air Conditioner)

It is another strong point that PEL is a market leader in WRAC. The window

room air conditioner is more demanded by the customers than its competitor’s

air conditioners because it has more durability in operating systems and cools

the room in few minutes. PEL always strives to provide the innovative features

in WRAC. PEL air conditioner is cheaper and has a higher quality than others


WRAC. That’s why customers always purchase the PEL window air

conditioner.

Number 2 in Refrigerators in Pakistan

After the Dawlance refrigerators PEL has a second position in refrigerators

market. PEL always continuously strives to pursue the strategies adopted by

the competitors. As a consequence the price war starts among the companies

so each company reduces the prices and tries to increase the sales of its

refrigerators. PEL is also making efforts for the quality improvements than its

competitor Dawlance.

Strong Grip in Home Appliance

So PEL is one of the companies, which is having a strong grip in the home

appliance i.e. WRAC, Refrigerators, micro way Owen etc that is a strong point

for the company. PEL is penetrating the market by introducing the new home

appliance like Split Air conditioner and always trying to get the maximum

shares in the home appliance market.

Strong Management

It is another plus point that PEL has a strong management. Its employees are

more competent and fully skill and knowledge. They always cooperate the top

management in achieving the goals that are assigned to them. Employees are

well aware about the company objectives and so they are committed to the

development of company.

Distribution of Authority

Top management of PEL delegates the power to the subordinates for

achieving the marketing objectives in a specified time period. So every

manager has an authority that use in achieving the Goals. He can easily

handle the complaints of customers and try to satisfy them. So it is a strong

point for the PEL because there is decentralization of powers.

Strong Research and Development Department


PEL has a strong research and development department that is continuously

trying to develop new features for the products. R&D department spends huge

amount of money for the development of product. R&D makes research for

introducing the new product and asks the customers what they want extra in

our products. For this purpose they hire the highly qualified employees in R&D

department. That is another strong position of PEL.

Free Customer Service

PEL provides free customer service for one year to its customers. So the

customers always buy the PEL products due to its free service and it

becomes loyal customer for the PEL. PEL always provides help to their

customers for repairing the WRAC, Refrigerators and other items. PEL always

make efforts to satisfy the customers.

Public Limited Company

Although PEL is owned by the SAIGOL GROUP but its shares can be

purchased and sold in stock exchange market. So every one who is interested

in purchasing the shares of PEL he can purchase. It is also called public

limited company. So people are more interested in buying the PEL products.

WEAKNESSES

Like other companies PEL has some weaknesses in operating the business. If

PEL overcome on these weaknesses then it can become a market leader in

the home appliance. PEL loose some competitive edge in the following points:

Lack of advertisement

System variations

Lack of Product range

Less Utilization of capacity


Financial Problems

Lack of Advertisement

It is a second major weakness of PEL that it never makes advertising on TV.

That creates hurdle in selling the products and customers cannot know the

changes, which are made in products by the company time to time. Company

is not in a position that it made advertising of all their products on a wide

range because of its high cash requirement towards the production side. Due

to this problem company always make efforts to develop strong relationships

with dealers.

System Variations

It is also the main weakness of PEL that there are rapidly a change in polices

of selling the products. That’s creates problems for the selling team how to

sell the products to the dealers because the top management requires the

urgent amount of money. So selling team sells the products sometimes on

hard cash that will reduce the prices of products that gives the benefits to the

dealers and creates problems for the management.

Lack of Product Range

PEL has introduced more products of consumer items but there are more

needs to develop new consumer items like PEL washing Machines, Vacuum

cleaner and other items. Due to lack of product Range, Company cannot earn

more profit because consumers have high demand of these products and they

say that if company is investing in these products then we can keep all PEL

items and we never need to keep other’s company products.

Less Utilization of Capacity

Due to lack of finance a company cannot utilize all its resources on its full

capacity. It increases the cost of products per unit that decreases the profit


margin of each consumer item. Sometimes company cannot allocate the

resources according to the requirements of production department that’s

becomes the problem for the complete utilization of resources. For the

company it is also the main point of weakness.

Financial Problems

Sometimes PEL faces the financial problems because its stocks are so much

piled up in the stores that create the problem of cash flow because when the

stocks are not sold and the production is in process for 24 hours a day than

the company faces such problems. So company aggressively researches the

sources of cash and stresses the dealers to sell the PEL’s products to the end

consumers. Company sometimes sells their products on advance bases to

the dealers and gives them high margin of profit. That’s why a company is

facing the financial problems and company never pays attention on the

alternative resources that will help in reducing the stocks. That is a customer

demand and due to this it is the main weakness of company.

OPPORTUNITIES

For the PEL there are more opportunities for expansion the business. If PEL

realize that opportunities then it will be more fruitful and profitable for the

company. Even if company does not take advantage of these opportunities

then it will loose its competitive position and high profit. Its competitors will

give PEL tough time to pursuing the opportunities that are adopted by them.

Following are the opportunities for the PEL.

Exploration of market in Pakistan

Increase in product range

Export opportunity

Increase in production capacity


Exploration of Market in Pakistan

PEL has the opportunity to explore the market in all over the Pakistan. Even

though PEL introduce its products in all cities of Pakistan but there are so

many places that have the capacity to absorb the PEL’s products. These

places are tribal areas in NWFP and northern areas of Punjab and NWFP,

central area of SINDH. If company introduces their products in these areas

then it can get a large amount of profit and increase its market shares.

Increase in Product Range

It is the main opportunity for the PEL that it can increase its product range that

will be a more profitable for the company. There are more needs to develop

new consumer items like PEL washing Machines, Vacuum cleaner and other

items. Due to lack of product Range, Company cannot earn more profit

because consumers have high demand of these products. If PEL does not

take this opportunity then it will loose high margin of profit and market share. It

will reduce the fixed cost and increase the efficiency of the employees.

Export Opportunity

PEL Company has also the opportunity to export their products in other

international countries like UAE, SAUDI ARABIA, and other Arabic and

African countries. It will not only reduce the dependence on one market but

also increase the market shares and profits. It will also help the company to

spread the fixed cost on all of its production that will reduce the total cost and

company will enjoy the high profit.


Increase in Production Line

Company can also increase its production line at the maximum level that will

increase the efficiency of the employees and also will reduce the total cost.

Sometimes company cannot allocate the resources according to the

requirements of production department that’s becomes the problem for the

complete utilization of resources. Company should look the market conditions

then it will produce their products.

THREATS

PEL Company in such a competitive era has many threats as well. These

threats are for the present situations and future. Company should make its

policies and strategies according to these threats. So following are the main

threats for the PEL:

Strong competition

China’s product introduction in the market

Price war

Slow growth rate in Pakistan

Instability of government

Tax department

World Trade Organization

Investors

Strong Competition

There is very strong competition for the home appliance in the market. So

every company tries to come in the number 1 position for achieving the


maximum shares in the market. Every company adopts different strategies for

selling of the products. It reduces the profit margin of each company and

increase the bargaining power of the buyers who will demand higher quality of

products and lower cost. That is the main threat for the PEL Company.

China’s Product

China’s products are another threat for the Pakistani companies because

these products are cheaper than the Pakistani products. An even china

product not well in quality but it is comparatively in low prices than the

consumer’s home appliance that are manufactured by the indigenous

company. China products stress the indigenous companies to lower the

quality and prices that will not be profitable in the long run.

Price war

As there is stiff competition in the home appliance market that will cause the

price war, So every company reduces the prices of its products to increase

the sales. It will not only reduce the profit margin of the company but also

reduce the quality of products. So price war is the main threats for all the

companies, which are operating in these products.

Slow Growth Rate in Pakistan

There is also slow growth rate of home appliance in Pakistan that will increase

the stocks of the company. It becomes the burden for the company that how

to sell these stocks. Its main reason is that purchasing power of the buyer is

very low and it has no income to buy the expensive the home appliance. It is

also becoming a main threat for all the companies.

Instability of Government

The rapid changes in governments will become threats for the companies

because every government adopts its own policies for the industries. So it


increases the uncertainty for the investors who want to invest heavy amount

in their new projects. That’s become the major threat for the companies and

decreases the profitability. Due to fear of politically instability companies will

also not invest the heavy amounts.

World trade Organization

World trade organization will give the permission in 2005 to each company of

home appliance to export their products after paying fewer duties or duty free

products. That will increase the pressures for the indigenous companies to

reduce the prices and increase the quality. It will increase the competition

among the foreign companies and indigenous companies. But our companies

also run under uncertainty conditions. This will decrease the morale of

indigenous companies.

Investor’s:

There are few people who have big investments and they are importing the

Chinese product by their own Brand name. This is a very big threat for the

company and company is trying to create some attraction for the investors to

demotivate the investors.

RECOMMENDATIONS

Co-ordination should be developed between departments to departments.

This can be done through setting goals and objectives of the whole

company not only for their different departments.

As I found brand name is very important factor in consumer buying

behavior, thus it is advised that PEL should work on the brand image.

Although PEL has a strong brand name, but it has to create much more

stronger one, mainly through advertising, to compete with Dawlance,

Waves, and other international brands.


The company should add more features to their products. People are

attracted towards a product with unique features and something that would

make the customers feel that they have got their moneys worth.

The company should take measures to improve the quality of their

products by improving the process. Thus the company is advised to take

steps towards improving the quality of its products, other wise it will lose a

lot of potential customers to their competitors.

To gain more competitive advantage over their competitors, PEL has to

work on their distribution network.

PEL more focus should be on electronic media to get competitive

advantage over the competitors. They have to increase their advertising

expenditures.

The company must give more incentives to the dealers so that they remain

loyal to the company and promote the products.

PEL should define the company’s mission and vision statement that can be

more helpful for them in future. Every organization however it is small or

large has clear direction where they want to go. Without direction or

knowing the purpose of their existence how an organization can make

progress.

They should advertise throughout the year so people should remember

them and will be more brand loyal and new customers will be attracted.

They should use all the medium of advertising to be more successful in

attracting customers.

PEL should open its internship programs on frequent basis so more and

more students can get the chance to work as an internee in such a huge


institute and get their relevant work experience. They can personally go to

colleges/universities or give an ad in newspaper.

In future, the managers of PEL should assign duties on daily basis.

The work given to the internees should not be general, rather it should be

according to their specialized field (i.e marketing, finance, HR) so after the

completion of their internship program they have practical knowledge of

that specific field.

Introduction of seasonal schemes can help to boost sales.

The product line of PEL is not good as compared to others like Haier,

Waves, Super Asia, so it’s good for the company for more success if they

work on it.

PEL should also tighten up its monitoring and inspection Networks in order

to minimize the miss-utilization of the resources by the employees and

verify the data accuracy gathered by them.

PEL should also take care of the Economical, Political Factors such as

inflation, Government Policies while projecting the Cost of Production for

future because this will help the company in entering into a fix price

contracts for the purchases of material at a single time similarly than it will

be able to charge stable prices to its customer.


AREAS OF IMPROVEMENT

There are certain vague points which should be the prime objective of this firm

to improve and come over them and the points are enumerated as follows

In the Accounts department there is a lot of unequal distribution of the

work in the whole departments. Some sections work very hard and

through out the day but some work just for limited time period.

The mission and vision statement need to be revised as it fails to

comply the objectives of the firm and hence it is blurring regarding the

deputation of the enablers.

Equal work should be distributed.

Lack of communication is there between the departments.

Canteen should be upgrade.

Mess for the internee should be upgrade.

Giving more work to internee for the quick completion of the company

task.


PROBLEMS AND RECOMMIDATION

It is advised that PEL should work on the brand image. Although PEL has a

strong brand name, but it has to create much more stronger one, mainly

through advertising, to compete with Dawlance , Waves, and other

international brands.

The company should add more features to their products. People are

attracted towards a product with unique features and something that would

make the customers feel that they have got their moneys worth.

To gain more competitive advantage over their competitors, PEL has to work

on their distribution network.

PEL more focus should be on electronic media to get competitive advantage

over the competitors. They have to increase their advertising expenditures.

The company should change the advertising theme and slogan to attract and

for the attention of customers. They should show some creativity in all

promotional activities. So PEL should come with some catchy and appealing

Slogan.

PEL should redefine the mission and vision statement because they fail to

comply and align the company objectives.

PEL should open its internship programs on frequent basis so more and more

students can get the chance to work as an internee in such a huge institute

and get their relevant work experience. They can personally go to

colleges/universities or give an ad in newspaper.


The product line of PEL is not good as compared to others like Haier, Waves,

Super Asia, so it’s good for the company for more success if they work on it.

INTERNSHIP EVALUATION

My internship was highly successful here at PEL though there were

some lack of training, lack of concern from the departmental employees,

lack of facilitation from HR department etc. In Order to prelude it can be

safely said the overall experience was really good and I tried hard to

gain maximum knowledge Impact of Internship on My Future Career.

QUALIFICATION AND INTERNSHIP

During my internship I learned a lot by applying my knowledge that is

helpful in my future planning and future career. I learned how to interact

with senior management and get their experience that is helpful in my

career. I have built the habit of regularity and punctuality through this

internship program. And there was a link between my qualification and

internship program I am applied my knowledge on internship which I

learned from my university.


SOURCES OF DATA COLLECTION

The sources from where I have gathered data for my report are:

www.pel.com.pk

Finance Department

Accounts Department

Mr. Muhammad Hanif (Manager Finance).

Mr. Tahir Mehmood (Senior Executive).

Mr. Ghulam Murshad (Finance Executive).

Mr. Zaigham Ali Sheikh (Finance Executive Budgeting section).

Mr. Fakhar Ali (Accounts Officer ).

Mr. Abdul Rasheed (Accounts Officer and Accounts Payable Head )

Mr. Ali Asad (Accounts Officer ).

Mr. Muhammad Afzal (Accounts Officer ).


http://www.pel.com.pk/

Lesson:

First of all, I would like to say that I am so happy after performing my task effectively

& efficiently. This obligation taught me a lot that will be very beneficial for me in my

future concerns. After completing my report & analysis of the financial performance, I

came to know about the real business tactics as well as the value of training.

One most important thing that I experienced in my training session was the training

ethics. Some people resist against some little work which is not according to their

status & qualification but still that little work may provide a lot.

Simply I found there that

“Each & every sphere of life is training”

Thank You


asif pel report final(submitted to khizar bin dost)

Documents

university life

practical life

company financial

student life

portion of life

division of pel

appliances division

modern era of life